Recent reports in the British financial media have helped confirm reports that a number of parties have expressed an interest in acquiring the Hilton Group Plc ‘s Ladbrokes gambling business.  Not surprisingly, the increased interest in Ladbrokes has caused shares in the company to reach new heights.

Apparently, talks entered into by the U.S. group Hilton Hotels Corp regarding the purchase of the hotels of its British namesake, sparked the interest of other companies in the Ladbrokes gambling business, thereby prompting a number of purchase inquiries.

"However, Hilton Group remains focused on concluding its negotiations with Hilton Hotels Corp. in relation to the sale of the Hilton International hotels division for the benefit of shareholders," claimed the company.

The Financial Times had reported earlier on that Hilton UK may be on the receiving end of offers for its Ladbrokes betting shop chain from companies including BC Partners Ltd., Blackstone Group LP and CVC Capital Partners Ltd.  Alex Pagett, a spokesman for Hilton, said that report was indeed correct and added: “We are obliged to make a statement due to press speculation."

Following the government’s decision to ease up on the 37-year-old laws that have governed the gambling industry, many U.K. gambling companies have begun to attract international interest. The U.K.'s biggest bingo-hall operator, Gala Group Holdings Plc, agreed in October to buy Coral Eurobet from Charterhouse Capital Partners and company managers for GBP 2.18 billion ($3.8 billion).  Ladbrokes, the world's largest bookmaker, could bring anywhere from GBP 3 billion to GBP 4 billion.

The Hilton Group is now valued at GBP 5.88 billion, after seeing a 2.8 percent increase in company shares on the London Stock exchange. This year alone, the company’s stock has risen by 29 percent.

Ladbrokes is Hilton Group's fastest growing and biggest business and it was Ladbrokes that helped buffer the company’s profits when the lodging division suffered financial losses as a result of the September 2001 terrorist attacks in the United States.  Revenue per room at Hilton’s hotels in the U.K. also declined after the July bombings in London.

If the sale of the International hotels division goes through, the company would become primarily a gambling company with a focus on Ladbrokes.  Ladbrokes accounts for approximately sixty percent of the annual profit.  In order to capitalize on the ever-expanding popularity of gambling, Ladbrokes has begun revamping existing shops and adding new ones.

Global Betting and Gaming Consultants in West Bromwich, England has predicted that the value of the British market will grow by 33 percent to GBP 11 billion by 2010.  This prediction is based on the amount won by gaming companies and assumes that even more casinos will be opened.

The Hilton Group company can be traced all the way back to a partnership established in 1886 to the village of Ladbroke in central England.  At that time a local racehorse trainer set up a partnership to take bets on races.

Posted on: December 27, 2005

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